Broadgate: Market News 29/1

29 January 2013

The S&P 500 eased slightly on Monday after an eight-day run of gains, while the Nasdaq edged higher as Apple shares rebounded.

The index remained above 1,500, however, after closing above that level on Friday for the first time in more than five years. The S&P 500’s eight sessions of gains was its longest winning streak in eight years.

Caterpillar shares helped limit losses on the Dow industrials even as the company posted a 55 percent drop in quarterly profit due to a charge connected with accounting fraud at a Chinese subsidiary and weak demand among its dealers. Caterpillar’s shares, down 2.2 percent in the past three sessions, rose 2 percent Monday to $97.45.

“I think this multi-year high is really something that’s in play both for shorter-term traders and with folks with money on the sidelines,” said Bucky Hellwig, senior vice president at BB&T Wealth Management in Birmingham, Alabama.

Bargain hunters lifted Apple after the tech giant’s stock dropped 14.4 percent in the previous two sessions. With Apple’s stock up 2.3 percent at $449.83, the iPad and iPhone maker regained the title as the largest U.S. company by market capitalization as Exxon Mobil fell 0.7 percent to $91.11 and slipped back to second place.

On the down side, Boeing fell 1.4 percent to $74 on worries about the potential hit from delays in its 787 Dreamliner program.

The Dow Jones industrial average was down 14.05 points, or 0.10 percent, at 13,881.93. The Standard & Poor’s 500 Index was down 2.78 points, or 0.18 percent, at 1,500.18. The Nasdaq Composite Index was up 4.59 points, or 0.15 percent, at 3,154.30.

Investors poured $55 billion in new cash into stock mutual funds and exchange-traded funds in January, the biggest monthly inflow on record, research provider TrimTabs Investment Research said.

“What we have seen this year is, it appears the individual investor is allocating some 401(k) money to equities. Hopefully that’s a decision that will be with us for a while,” Hellwig said.

U.S. durable goods orders jumped 4.6 percent in December, a pace that far outstripped expectations for a rise of 1.8 percent. Pending home sales, however, unexpectedly dropped 4.3 percent. Analysts were looking for an increase of 0.3 percent.

Corporate earnings so far have mostly been stronger than expected. Thomson Reuters data showed that of the 150 companies in the S&P 500 that have reported earnings so far, 67.3 percent have beaten analysts’ expectations, which is a higher proportion than over the past four quarters and above the average since 1994.

After the bell, shares of Yahoo rose 4.4 percent to $21.21 following the release of its results.

During the regular session, Hess Corp shares shot up 6.1 percent to $62.48 after the company said it would exit its refining business, freeing up to $1 billion of capital. Separately, hedge fund Elliott Associates is looking for approval to buy about $800 million more in Hess stock.

Stocks have also gained support from a recent agreement in Washington to extend the government’s borrowing power. On Monday, Fitch Ratings said that agreement removed the near-term risk to the country’s ‘AAA’ rating.

Volume was roughly 6.1 billion shares traded on the New York Stock Exchange, the Nasdaq and the NYSE MKT, compared with the 2012 average daily closing volume of about 6.45 billion.

Decliners outpaced advancers on the NYSE by nearly 4 to 3, while advancers beat decliners on the Nasdaq by about 7 to 5.

Currencies

The yen on Tuesday slipped back toward a 2 1/2 year low struck a day earlier against the dollar, hurt by signs of upbeat sentiment toward risky assets, while the Australian dollar rose on data showing a rebound in Australian business confidence.

The dollar rose 0.1 percent against the yen to 90.99 yen, not very far from the previous day’s high of 91.26 yen, the greenback’s strongest level versus the Japanese currency since June 2010.

The greenback fell as low as 90.40 yen earlier, pressured by dollar-selling, possibly from Japanese exporters, ahead of the 0100 GMT Tokyo fixing. Traders also cited dollar offers from options players.

The dollar however, later turned higher versus the yen as Asian equities and Tokyo shares bounced, traders said, adding that the greenback’s uptrend versus the yen looked intact.

“I still think dollar/yen will head higher,” said a trader for a European bank in Tokyo. “In the near term, I think the dollar will trade between 90 yen to 92 yen,” he said.

Selling the yen has been a one-way trade since mid-November, based on expectations that Japanese Prime Minister Shinzo Abe would push the Bank of Japan into more forceful monetary easing to beat deflation.

“Everyone is only thinking about where to buy (the dollar) on dips,” said a trader for a Japanese bank in Bangkok, referring to the dollar versus the yen.

The Australian dollar rose 0.2 percent to $1.0438, getting a boost after a survey showed that Australian business confidence rebounded sharply in December.

The euro rose 0.1 percent versus the yen to about 122.32 yen, not far from Monday’s high near 122.90 yen, the euro’s strongest level against the Japanese currency since April 2011.

Against the dollar, the single currency held steady at $1.3452, hovering close to an 11-month high of $1.3480 set on Friday on trading platform EBS.

The euro had gained a boost late last week on news about euro zone banks’ early repayments of three-year loans to the European Central Bank, which suggested that parts of the euro zone banking system may be on the mend.

The euro, however, faces a series of major resistance levels near $1.35, including its 2012 high of $1.34869, the 50 percent retracement of its May 2011 to July 2012 drop near $1.3491, and the psychologically important $1.3500 level.

Sterling held steady at $1.5700, having hit a five-month low of $1.5675 on Monday.

Sterling has been weighed down by worries about a weak UK economy and prospects of more monetary easing by the Bank of England.

“The prospect of more activist monetary policy is not exactly an encouraging one for GBP, certainly not as it comes on top of a host of other negative developments – an economy that is triple-dipping, a government that is struggling to cut its deficit, and soul-searching about the UK’s role within the EU,” wrote analysts at JPMorgan in a note.

Source: Reuters.com

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